ANNUITY
[Link] difference between the simple and compound interest compounded annually on
a certain sum of money for 2 years at 4% per annum is ₹1. The sum is
(A) ₹625 (B) ₹630 (C) ₹ 640 (D) ₹ 650
2. The compound interest on ₹50000 at 5% per annum is ₹5125. The time period is
1
(A) 12 years (B) 2 years (C) 2 years 2 (D) 3 years
3. The difference of the compound interest on ₹1000 for 2 years at 4% per annum
compounded yearly and compounded half-yearly is
(A) 0.79 (B) 0.80 (C) ₹0.83 (D) ₹0.96
4. At what rate percent per annum will a sum of ₹12000 become ₹13230 in 2 years?
(A) 5% (B) 5.5% (C) 6% (D) 6.5%
5. Mahesh invested an amount of ₹10000 in a fixed deposit scheme for 2 years at
compound interest rate 8% per annum. How much amount will Mahesh get on maturity
of the fixed deposit?
(A) ₹11446 (B) ₹11466 (C) ₹11644 (D) ₹11664
6. The effective annual rate of interest corresponding to a nominal rate of 8% per annum
payable half-yearly is
(A) 8.08% (B) 8.10% (C) 8.16% (D) 8.20%
7. If the simple interest on a sum of money for 2 years at 6% per annum is ₹120, then the
compound interest on the same sum at the same rate for the same time is
(A) ₹123.50 (B) ₹ 123.60 (C) ₹ 123.80 (D) ₹123.90
8. The simple interest on a certain sum of money for 2 years at money for 2 years at 10%
per annum is half the compound on ₹5000 for 2 years at 10% per annum. The sum is
(A) ₹2625 (B) ₹2500 (C) ₹ 2850 (D) ₹2925
9. The difference between simple interest and compound interest on ₹ 15000 for 1 year
at 8 % per annum calculated half-yearly is
(A) ₹20 (B) ₹22 (C) ₹24 (D) ₹26
10. In what time will a sum of ₹ 1562.50 produce ₹195.10 at 4% per annum compound
interest?
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(A) 1½ years (B) 2 years (C) 2 2 years (D) 3 years
11. The amount of compound interest which is calculated yearly on a certain sum of
money is ₹1250 in one year and ₹1375 in two years. The rate of interest per annum is
(A) 8% (B) 9 % (C) 10% (D) 11%
12. The amount of money today which is equal to series of payments in future is
(A) nominal value of annuity
(B) sinking value of annuity
(C) present value of annuity
(D) future value of annuity
13. Assertion (A): The effective annual rate of interest corresponding to a nominal rate
of 10% p.a. payable half-yearly is 10.25%.
Reason (R): If nominal rate is r% compounded p times in a year, then effective rate of
𝑟 𝑝
interest per rupee annually is (1 + 100𝑝) − 1
14. Assertion (A): The present value of an annuity of ₹2000 payable at the end of each
year for 3 years is ₹5448, if the money is worth 5% effective. (Given (1.05) -3 = 0.8638 ).
1−(1+ⅈ)−𝑛
Reason (R): The present value of a regular annuity is P = R(1 + i)[ ]
ⅈ
where R is periodic payment, i = r/100 where interest being r% and n = number of
periods.
15. A plant requires an initial investment of ₹800000, which is expected to generate net
cash inflows of ₹325000, ₹350000, ₹400000 and ₹450000 at the end of first, second,
third and fourth years respectively. Discount rate is 18% per annum.
Based on the above information, answer the following questions:
(a) Find the present value of cash inflow expected at the end of first year and second
year
[Use (1.18) -2 = 0.7181 ]
(b) Find the present value of cash inflow expected at the end of third year and fourth
year. [Use (1.18)-3=0.6085 and (1.18)-4 = 0.5157]
(c) Find the net present value of the investment.
OR
If the machinery in the plant will be sold for ₹80000 at the end of fourth year, then find
the net present value of the investment.